Turkey: Economic growth continues to ease in Q2 despite strong exports
September 10, 2012
In the second quarter, GDP rose 2.9% over the same period last year. The reading represents a deceleration compared to the revised 3.3% expansion recorded in the first quarter (previously reported: +3.2% year-on-year) and marked, in fact, the lowest growth rate recorded since the third quarter of 2009. In addition, the figure undershot market expectations, which had anticipated a 3.3% rise. The slowdown in the second quarter was entirely caused by a moderation in the domestic sector. Private consumption contracted 0.5% over the same period last year (Q1: +0.2% yoy), the first decline seen in almost three years. In addition, gross fixed investment plunged 7.4%, a sharp deterioration over the 1.5% increase recorded in the first quarter. Meanwhile, the net contribution from the external side of the economy improved. Exports of goods and services surged 19.8% (Q1: +11.9% yoy) in spite of the recession currently affecting most of the European Union, Turkey's main trading partner. The figure represents, in fact, the fastest pace seen in over a decade. Meanwhile, imports contracted 3.6%, an improvement over the 6.0% decline recorded in the first quarter. As a result, the external sector's net contribution to overall growth improved from 4.6 percentage points in the first quarter to 5.7 percentage points in the second. A quarter-on-quarter analysis, however, does not corroborate the slowdown suggested by annual figures, as GDP grew a strong 1.8% over the previous quarter in seasonally and calendar-day adjusted terms, contrasting the 0.1% contraction recorded in Q1. The government anticipates economic growth to reach 4.0% this year.